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A debit balance in the Retained Earnings account is identified as a deficit.
Answer:
For each of the ratios listed below, indicate by the appropriate code letter, whether it is a
liquidity ratio (L), a profitability ratio (P), or a solvency ratio (S).
____ 1> Times interest earned ratio
____ 2> Asset turnover
____ 3> Accounts receivable turnover
____ 4> Debt to assets ratio
____ 5> Current ratio
____ 6> Payout ratio
Answer:
In one closing entry, Dividends is credited and Income Summary is debited.
Answer:
A current ratio of 1.2 to 1 indicates that a company's current assets exceed its current
liabilities.
Answer:
A multiple-step income statement provides users with more information about a
company's income performance.
Answer:
Your friend, Angela, made this comment:
My major is biology and I plan to research for cures for major illnesses. Thus, I have no
need to study accounting.
What is your response to Angela?
Answer:
Your friend Jenny has opened an office supply store. She will extend open credit to
local businesses and is concerned about potential bad debts. What can Jenny do to
reduce potential bad debts?
Answer:
In accordance with the historical cost principle, the cost of debt investments includes
brokerage fees and accrued interest.
Answer:
The terms 2/10, n/30 state that a 2% discount is available if the invoice is paid within
the first 10 days of the next month.
Answer:
Current maturities of long-term debt refers to the amount of interest on a note payable
that must be paid in the current year.
Answer:
